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Taxes on property acquisition
The acquisition of property by non-residents in Mallorca has some significant tax consequences. Whether it be property transfer tax, value added tax, stamp duty, or wealth tax – the tax authorities in Mallorca are aware of the island's attractiveness and the high demand for holiday properties, therefore they levy some taxes on non-residents.
With this, one-off taxes on property acquisition and annual taxes on ownership are payable.
All of the following information is for guidance purposes only and does not in any way replace expert tax and legal advice. Rossitza Hantelmann Real Estate S.L. does not provide legal or tax advice and accepts no liability for the content.
One-off taxes on property acquisition
When purchasing new-build properties for initial occupation, value added tax (VAT) is generally applicable. The rate applied depends on the type of property. For residential properties with 2 garage parking spaces, the current rate is 10 % of the purchase price.
The tax rate for the purchase of land and commercial properties is different; it amounts to 21% of the purchase price.
Unlike in Germany, the percentage rate of the real estate transfer tax is based on the certified purchase price of the property, with the following graduated scale currently applying:
- Real estate up to a purchase price of 400,000 euros is taxed at 8%.
- Properties with a purchase price of more than €400,000 up to €600,000 are taxed at 9%.
- Real estate with a purchase price greater than €600,000 and up to €1,000,000 will be taxed at 10 %.
- Real estate with a purchase price of more than €1,000,000 and up to €2,000,000 is taxed at 12%.
- Properties with a purchase price of over 2,000,000 Euros are taxed at 13%.
Stamp duty is an indirect tax levied on the issuance of official documents required for property acquisition.
The name „stamp duty“ originates from the stamp of the official local authority that issues the documents.
Stamp duty is based on the value of the property, which is officially recorded by the notary.
On the Balearic Islands, it is now 1.5 %from January 1, 2023.
On a purchase price exceeding €1,000,000, the notary or stamp duty tax rate increases to 2 %. The deadline for paying the stamp duty is 1 month after the signing of the notary deed.
Ongoing tax after property acquisition
This property tax is a local direct tax that applies equally to non-residents, Spaniards, and tax residents. The property tax is levied by the relevant municipalities based on the cadastral value of the property and must be paid annually.
This income tax applies to both residents and non-residents.
As a general rule, income from the rental of Spanish property must be taxed, otherwise taxes will also be incurred if the property is used by the owner.
Wealth tax was reinstated throughout Spain in 2011. For residents and non-residents in Spain, wealth tax applies to net wealth and is progressive, ranging from 0.2 to 3.5 %. A tax-free allowance of €700,000 is granted to non-residents.
TAXES ON PROPERTY SALES
The seller of a Spanish property must also pay taxes to the Spanish tax authorities. Unlike in Germany, where the sale of property held by the seller for at least 10 years can be sold tax-free, in Spain, all capital gains are fundamentally taxable. At the state level, capital gains tax is levied as part of the annual tax return.Income TaxAt the municipal level, the profit tax must be paid in the form of a capital gains tax on land (Plusvalia).
One-off tax
The profit from the sale of Spanish property owned by a non-resident is taxable in Spain. The profit from the property sale is calculated as the difference between the acquisition cost, i.e. the notarised value plus incidental acquisition costs (VAT, property transfer tax, notary and registration fees), plus value-enhancing expenses (modernisation and renovation costs, accumulated depreciation, agent fees) and the sales proceeds. A tax of 19% is payable on the profit thus determined. This tax rate of 19 % is independent of the period of ownership of the property in Spain.
Bezüglich der vom Verkäufer zu zahlenden Einkommensteuer auf den Veräußerungsgewinn gibt es in Spanien die Sonderregelung, dass der Käufer 3 % des beurkundeten Kaufpreises einbehalten und innerhalb eines Monats als a-conto-Zahlung auf die Gewinnsteuer des Verkäufers an das Finanzamt abführen muss. Damit sichert sich der spanische Fiskus einen Teil der zu erwartenden Gewinnsteuer. Der nichtresidente Verkäufer hat innerhalb von 4 Monaten seit dem Verkauf eine Steuererklärung für den Immobilienverkauf abzugeben, in der er dann die 3 % als bereits geleistete Zahlung auf die endgültige Steuerschuld absetzen kann.
In addition to the 19%% profit tax, the seller is subject to the so-called capital gains tax (Plusvalia) upon sale. The Plusvalia is levied by the local municipalities and relates to the (fictional) increase in value of land and soil – not of the buildings. To calculate it, one needs the cadastral value of the land, the duration of ownership, and the calculation factor of the respective municipality. The Plusvalia tax liability must be paid to the tax office within 30 days via self-assessment.
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